Nama may need to lend to property buyers

THE NATIONAL Asset Management Agency (Nama) may have to consider lending to property buyers to kick-start the flagging market, according to Steven Seelig, one of its board members.

Mr Seelig, a former senior official at the IMF, said Nama might have to offer loans to property buyers, including residential homes, to stimulate sales as the banks are not lending on property.

“It will need to do it just to kick-start the market. It is from a public policy point of view. You want to get the market going again,” he said in his first interview with an Irish newspaper since joining the Nama board in May 2010.

“Unless there is somebody else willing to do the financing, Nama will have to do some of it just to get some sales going in the market.

“Once the market sort of stabilises, lenders and more buyers will come in. There is always this fear of buying too high and watching a market continue to fall.”

A spokesman for Nama said its board had not considered lending to buyers and if it did, it would require changes to legislation. Nama only has statutory powers to lend up to €5 billion in working capital to developers to complete building projects.

The agency would not have to provide cash to buyers as Nama would own the properties, said Mr Seelig, but it would take a loan note from a purchaser in addition to a cash deposit representing a sizeable percentage of the value of the property, perhaps as high as 25 per cent or 30 per cent.

Mr Seelig said if the loan provided by Nama to the borrower performed for a year or two, the agency could sell it into the international markets to raise cash.

“If you underwrite good quality loans and those loans perform, Nama can eventually sell those loans so Nama has completed its mission – that is not a problem as long as it is using good prudent underwriting standards,” he said.

“At least that would get the market going on and you have some transactions and reasonable prices so people can get pricing.”